* Q2 net profit rises 21 pct to $896 mln
* Says on track to deliver 2017-2019 targets, including cost cuts
* CEO: performance positions group for sustainable dividend growth (Recasts with comments from CEO and analysts)
By Brenna Hughes Neghaiwi
ZURICH, Aug 10 (Reuters) - Zurich Insurance posted a 21 percent rise in second-quarter profit and bulked up its capital strength, giving it firepower to raise its dividend or use extra cash for acquisitions.
Following two smaller acquisitions and two divestitures by Europe's fifth-biggest insurer, and talk of industry consolidation this year, Chief Executive Mario Greco again stressed that the group's strategy does not rely on deals.
"There are no gaps that we are trying to fill," Greco told journalists on a call on Thursday.
"We are very, very disciplined in deploying capital where we need or taking capital back when we can," Greco said. "We have no need from a strategic standpoint to acquire or sell businesses. We just do it when it appears convenient to us."
Zurich said its solvency measured under the Zurich Economic Capital Model stood at 134 percent as of end-June, well above the target range of between 100 and 120 percent and marking a 9 percent rise since the start of the year.
"The group's capitalisation is now well above its own target level but we note that the company was recently mentioned as a potential bidder for ANZ's life insurance and fund management operations, which could be worth more than $3 billion," Baader Helvea analyst Daniel Bischof wrote in a note.
Greco declined to comment on any potential deals. He said the combination of rising profits and strong capitalisation let the group stick its goal to grow dividends over time, adding indications so far this year were positive.
In November, Greco upped the company's cost-cutting goals, aiming to generate net savings of $1.5 billion by 2019 compared with 2015, while trimming the group's main profitability goal to a more achievable level.
Zurich said on Thursday it had so far cut costs by $550 million and that efforts to reshape its underperforming general insurance unit were making strides.
It said pricing adjustments, falling costs and an improved underwriting performance had benefited the property and casualty business during the first half.
Shares rose 0.4 percent.
The Swiss insurer's net profit for April through June rose to $896 million, beating even the highest estimate in a Reuters poll of analysts.
German rival Allianz last week posted a 22.9 percent rise in second-quarter operating profit to 2.9 billion euros as Chief Executive Oliver Baete said a three-year renewal plan was clearly bearing fruit. (Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields and David Holmes)